Admitting defeat, US ride-hailing firm Uber is selling its China operations to its bigger local rival there Didi Chuxing.
That will end a two-year-long bruising price war between the two as they spent billions on discounts to attract riders.
Uber, which is profitable in the United States, Canada and about 100 other cities worldwide, admitted to burning through more than $1 billion a year (895 million euros) in China.
Didi itself had been formed from a merger of China’s top two ride-hailing companies who got together to fight off Uber.
Under the deal, Uber gets a one-fifth stake in Didi making it the Chinese firm’s biggest shareholder.
In return Didi will invest $1 billion in Uber, opening the possibility the two could work together in other cities around the world.
Uber’s chief executive Travis Kalanick wrote on his company’s website: “Sustainably serving China’s cities, and the riders and drivers who live in them, is only possible with profitability. This merger paves the way for our team and Didi’s to partner on an enormous mission, and it frees up substantial resources for bold initiatives focused on the future of cities – from self-driving technology to the future of food and logistics.”
He said Uber was operating in more than 60 cities in China and “doing more than 150 million trips a month.” Didi, however, claims 87 percent of the Chinese market for private vehicle ride-hailing.
Great business wall of China
This is the latest sign that global Internet and technology companies are having a hard time breaking into China’s tough market where entrepreneurs have built formidable businesses, with government support.
Ebay, Google, Facebook, Twitter and Yahoo have all struggled to build a presence there.
Competition experts said it was likely this deal would be approved by the government.
Beijing officials also recently ruled ride-hailing services are legal in China which will help the booming industry.